Marketing in China: Luxury Retailer Secoo Pairs Data with Tencent's to Create Customer Profiles
Secoo has emerged as a player in China’s luxury ecommerce sector by leveraging big data to help its brands grow sales. It has also burnished its reputation for pioneering an industry-leading commitment to combat counterfeits. Secoo’s CMO Nicole Yang spoke with eMarketer’s David Green about where the growth of luxury products stems from in China, and why the platform does so well with male luxury shoppers.
eMarketer: What’s behind the growth in China’s digital luxury spending?
Nicole Yang: Luxury consumers in China are buying more for themselves, rather than gifts—that is one of the key drivers. Another is demand from lower-tier cities.
In December 2016, we released a white paper with Tencent. We studied Tencent consumer behavior data over the past three years alongside data for 15 million high-end Secoo consumers. The geographical distribution of our customers, especially high-frequency and high-spending consumers, was in tier 3 and tier 4 cities—places that even I, as a Chinese person, have to Google to find. For example, our highest-frequency purchasers come from the [Ili] Kazakh Autonomous Prefecture.
eMarketer: Males accounted for 47% of Secoo users in 2016, had a higher average spend per purchase than females, and were also prone to purchasing more frequently. Did that surprise you?
Yang: If you look at vip.com, Tmall or other more fashion-based ecommerce platforms, the gender distribution is 80% female, whereas for us it’s more like 50-50. A typical male Secoo user is in his late 20s to early 30s, is quite affluent but still needs to work hard. His time is very precious, and he has high standards about his appearance but doesn’t want to invest a lot of time in it.
“We aim at high luxury, which is around RMB4,000 [$602] per transaction. In that area, male customers are becoming more important than female customers.”
eMarketer: And why is he attracted to Secoo over Tmall or vip.com?
Yang: We aim at high luxury, which is around RMB4,000 [$602] per transaction. In that area, male customers are becoming more important than female customers.
Females are mainly focused on luxury handbags and shoes. But for their clothes, they still prefer low-priced brands because they change their wardrobe every season or month.
Guys don’t need to change their clothing that frequently. Their choices are more classic, so they are willing to invest more in good quality shirts or shoes. That brings the male spending proportion higher. Also, when Secoo launched, we only focused on watches and handbags. We already had a word-of-mouth reputation as a great platform to buy luxury watches, so we acquired many male consumers.
eMarketer: You have a data cooperation partnership with Tencent—does that help your brands when it comes to retargeting?
Yang: Currently the ecommerce data—what kind of product an individual browses, puts into a shopping cart or orders—is from Secoo’s database. But all media consumption or social consumption data is from Tencent. We are able to connect these two groups of data to create an individual profile. We leverage the Tencent system to retarget them: That’s really why we do the collaboration.
eMarketer: Secoo has established a number of brick-and-mortar stores in cities in several countries, including Milan, Hong Kong, Kuala Lumpur and Shanghai. What’s the thinking behind those stores?
Yang: One of the challenges for luxury ecommerce consumers is they cannot really get the level of service or experience online that they do when buying in offline stores.
Secoo has invested a lot in the offline experience because we do not want to be limited to ecommerce. Our purpose is not necessarily to sell products, but to offer superior service or experiences around the products consumers already have.
“When consumers enter our stores, we ask whether they are Secoo users. If they are, their profile will be analyzed.”
eMarketer: Presumably having an offline presence also helps with retargeting and fleshing out user profile data?
Yang: When consumers enter our stores, we ask whether they are Secoo users. If they are, their profile will be analyzed. The salespeople will see what kind of brands, categories and what level of price range the customer prefers so they can provide very targeted recommendations.
We also hire local people who are familiar with top events in their city or hidden restaurants or clubs to visit. It’s a little bit like the concierge in the hotel industry.
eMarketer: What measures has Secoo taken to stop fake products appearing on the platform, and how important is it for the industry as a whole to stop counterfeits?
Yang: Anti-counterfeiting is the most critical matter. Every single product that goes into Secoo’s warehouse requires authentication. And when products are delivered, we do a second wave of authentication. Secoo is now famous for authentication. Consumers even bring products they purchased from other channels to us to check if they are real.